Gov. Hochul unveils the NY state budget. Here is what it means for real estate

After an additional week of negotiations, Governor Kathy Hochul announced that she reached an agreement on the FY2023 New York State budget. The $220 billion budget does not include Hochul’s replacement program for the 421-a tax break, which is widely used by real estate developers. 

The 421-a tax abatement allows developers in New York City to pay lower property taxes in exchange for including affordable housing units in new constructions. The new version of the program, proposed by Gov. Hochul, received support from multiple real estate groups and unions, including the Real Estate Board of New York and property service workers union 32BJ SEIU.

“The worst thing we can do is to let the program expire without a replacement in place and see both good jobs and affordable housing production fall off a cliff — stripping our communities of much-needed affordability and leaving workers in the lurch,” 32BJ SEIU union president Kyle Bragg told the City.

However, NYC Comptroller Brad Lander and several Council members criticized the new version of the developers' tax break for being too similar to the current one and not providing deeper affordability. NYC Comptroller Brad Lander released a statement, where he says that “lawmakers made a right call in declining to rush through a tweaked version of the 421a tax exemption program.”

“Now, with three months remaining until the expiration of the 421a program on June 15th, we have an opportunity to fix what’s broken in New York City’s property tax system, level the playing field for rental housing construction, and finally target our affordable housing tax exemptions to actually affordable housing,” Lander wrote.

In addition, the New York state budget did not include the $250 million Housing Voucher program proposed by the Senate and Assembly. The program helps families to transition from shelters into stable housing. However, the budget did include $800 million for the state’s Emergency Rental Assistance program, $250 million to help New Yorkers who are behind on their utility bills, and $125 million in homeowners and landlords assistance. 

Resources:

“Real estate winners and losers: state budget edition,” by Kathryn Brenzel(The Real Deal, 2022)

“Governor Hochul Announces Agreement on FY 2023 New York State Budget,” (New York State, 2022)

“Video, Audio, Photos & Rush Transcript: Governor Hochul Announces Agreement on FY 2023 New York State Budget,” (New York State, 2022)

“Statement from NYC Comptroller Brad Lander on Exclusion of 421a Renewal from the FY 2023 State Budget,” (New York City Comptroller Brad Lander, 2022)

“Can NYC Live Without Its $1.7-Billion-a-Year Developer Tax Break? Dueling Claims Define Budget Talks,” by Greg David (The City, 2022)